Sectors that can gain in market cap weightage
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Identifying Multibaggers
Forum Discription: Discuss specific attributes that investors could look at while choosing multibaggers. Also point out certain factors that investors tend to overlook while finding multibaggers.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=498
Printed Date: 06/May/2025 at 10:32am
Topic: Sectors that can gain in market cap weightage
Posted By: basant
Subject: Sectors that can gain in market cap weightage
Date Posted: 15/Oct/2006 at 8:20pm
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Sectors that can gain in market cap weightage The Indian market cap to GDP ratio is near to 90%. While this means that all sectors should be represented by at least 90% of their contribution to the GDP the listed space actually throws up quite a few anomalies. While the biggest anomaly could be in agriculture since its percentage to GDP is more then 50 times its percentage to the overall market cap. On the other hand software would have a market cap of more then 50 times its contribution to the GDP so these discrepencies would remain. I have however tried listing down the sectors that have growth potential within them so that we as investors can help track down the winners in each of these spaces.
Source: UBS Conclusion: The above table is a broad guide to the kind of companies that could become big. A very interesting observation could be media. This sector takes up more then a significant percentage of the market cap of the foreign markets whereas in ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Replies:
Posted By: investor
Date Posted: 15/Oct/2006 at 9:48am
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Very interesting. Basant, how did you arrive at the industry size valuations? |
Posted By: omshivaya
Date Posted: 15/Oct/2006 at 11:23am
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Basant ji, I think you should clarify whether the retail industry total is the organized retail or the retail as a whole. I think comparing the organized retail market cap with the total(organized) retail industry would be fair. Is 300 bill US$ the total for the organized retail industry. If that is so, then its pretty darn amazing. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 16/Oct/2006 at 4:51pm
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I have taken some inputs from UBS and other from the net. The organized retail is only 3% so that does not matter. This is the total size.With time later organized will grow to the extent of 70%+. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 16/Oct/2006 at 11:40pm
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Well, that clarifies it. Thank you. ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: vip1
Date Posted: 17/Oct/2006 at 4:46pm
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Basant, what about Infrastucture (Roads, Power etc), isn't that the Largest opportunity . L&T, BHEL,AREVA,NTPC,SIEMENSETC.? Industry size >400 billion USD
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Posted By: basant
Date Posted: 17/Oct/2006 at 4:54pm
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Good point. Do we spend US $ 400 billion? I would think that Rs 18,00,000 crores is not what we spend on infrastructure each year. Will try and see if I could get something on that. This comes to 60% of our GDP which does not seem possible at first look? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: vip1
Date Posted: 17/Oct/2006 at 7:11pm
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I am quoting from the Prime Ministers address at the Economic Times Awards held in Bombay Last week. The point is all the above Sectors can only grow once the Infrastructure is in place. Retail - needs Roads, Power for Stores, Building Insurance - You can only reach Rural areas if you have Roads Airlines - We need airports FIRST Logistics -You need Roads, Ports
Telecom - You need power to recharge your batteries.
The List goes on ------
This 400 Billion USD is a spend over a period of time
India, Inc. shoots the questions
 javascript:clippopup%282132868%29;"> [ TUESDAY, OCTOBER 10, 2006 04:08:56 AM]Gautam Singhania: Sir, India Inc is gearing up to be globally competitive. However, we see a couple of areas of concern. One, that of the infrastructure, and the other, warped labour laws. We would like your views on how we could expedite investment in infrastructure and reform labour laws.
PM: That infrastructure needs lot more investment is something which is beyond doubt. And in some sectors we haven’t really taken off. In Railways, in the next five or six years, massive investment, massive modernisation is going to take place. In the same way, the telecom sector is also going forward and although it's not so visible, in ports and airports also there is lot more activity. I do agree that the power system in our country and the energy area happen to be somewhat of a laggard. |
Posted By: Vivek Sukhani
Date Posted: 18/Oct/2006 at 7:34pm
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I agree with you vip1.Also, returns from these sectors are dpendent upon the competition in the prevailing sectors. Most of these sectors require big initial capital investment and the resulting profit/Fixed asset is not very high.Also, a sector like Insurance requires very good participation from re-insurers, which India doesnt have many. It is they who will make a killing.Telecom is definitely good. Problem is out of the sector mentioned, there are some public sector giants already in them. For instance in insurance, LICwill continue its march given its strength of distribution and agent loyalty.Telecom also has BSNL and MTNL which may lag behind however.Logistics, is also a place where state owned or controlled enterprises dominate.Airlines is something which will always look decent but they will not be investors' delight for long. retailing may be definitely an area of importance but you need to watch out for competition.So, scalability is definitely an opportunity but how much will translate into profits is a different game altogether.
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Posted By: basant
Date Posted: 18/Oct/2006 at 7:45pm
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This 400 Billion USD is a spend over a period of time:
__________________________________________________________
Yes that is what I meant. The above figures reflect annual industry/sales only. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: kulman
Date Posted: 05/Nov/2006 at 12:13pm
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Most people in the market are obsessed with outperforming returns from major indices (Sensex/Nifty). Even during the Diwali show, the heroes mentioned on CNBC that large-caps would out-perform mid & small caps in any market over the long term.
Now without getting into the debate of large v/s mid/smaller-caps, let's do some crystal gazing to project the future composition of Sensex.
Given below is approximate current composition & some wild guesses on sector-wise projection. It's just a wild guessing really, one might call it too macro or too much of a top-down approach.
Some of the points to consider are:
The idea is to indetify growth areas & large companies (with good managements) in those sectors which are likely to benefit by sheer size of the opportunity. Here one may not be looking at multi-baggers though, but steady earners with lesser downside.
Let's debate on this...... ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: s_praharaj
Date Posted: 05/Nov/2006 at 12:38pm
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To my mind the following sectors will also grow. 1. Companies working on software and telecom security. 2. Drinking Water will be scarce and there may be great movements in this area. 3. Power from alternate source. In this Nuclear Power is one of the sectors.
4. Drug Research- Now research for cure of many diseases are in a low ebb. I feel, like software boom now going on, the next boom and discovery will be in Pharmaceutical Research.
We have to see which will be the best companies in these sectors which can reap the benefits in after say 5 years from now. ------------- Shashi Praharaj |
Posted By: basant
Date Posted: 05/Nov/2006 at 10:06pm
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Great work Kulman ji. Let me put in my thoughts with some reasoning:
1) In 2010 the car and bike market should double so the weightage could at best be stable so I would not change that.
2) Organized Retailing should be a Rs 150,000 crore sector in the listed segment that is about 1,50,000 crore of market cap. The sensex is Rs 16 lac crore now and should be Rs 30 lac crore in 2010. Therefore retailing should take about 4-5% of weightage.
3) Private Insurance should eb a Rs 50,000 crore market. it is around 25,000 crore now. That gives it at least 2-3% weightage
4) Telecom should increase 5 times but the index will have Bharti and RCOVL so this weightage should double by that to at least 16%.
5) Media will be a small upcoming sector and we should have a 1-2% weightage with Zee and any other company. I would not guess that name???
6) That brings us to the mathematical impossibility the total exceeds 100%. See India is a services led economy I would think that weightage of the old economy will decrease so while power generation would go up its weightage could actually decrease since power companies would not be able to keep pace with the service economy in growth also the cement and other material sectors could actually see a weightage compression. We need to see which sectors would grow faster then the others so even though a sector would grow at 10% its overall weightage could decrease if the average growth is say 15%.
What do you all say? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 10/Nov/2006 at 4:29pm
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Basant ji, When do you think TV18 should become part of the sensex? IT etc. came into the sensex and before that there were other bellwethers in sensex. Now, which ones do you think would be bellewethers. In what sector especially? In let's say Japan, which are the companies in the top 30 of the major index, like here in sensex. If India has a Japan kind of secular bull rally, I just wanted to get an idea where we could be headed.
Thanks ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 10/Nov/2006 at 4:36pm
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Just before it becomes a twenty bagger from here. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 10/Nov/2006 at 4:47pm
Okay then. I'll give TV18 around 7-8 years for that no more  ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: reetesh
Date Posted: 23/Nov/2006 at 2:24pm
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Sir, Which sector can give best return from 10 years point of view. Name 3 to 5 sectors in most favoured to least favoured order. ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: basant
Date Posted: 23/Nov/2006 at 3:08pm
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If I were to list them from current levels this is how I would go:
1) Electronic Media and Internet
2) Retailing
3) Insurance (nothing specific to play here)
4) Mobile Telephony (Growth should taper in 5 years)
5) Financial Services (Private Banking, Brokerages, Asset Management)
6) Entertainment - Radio and Multiplexes (growth shopuld taper off in 5 years here also) ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 23/Nov/2006 at 3:33pm
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I would like to add to the above post that these are sure shot sectors irrespective of what happens. They are items of BIG changes and have happened all over the world. Once this is clear it becomes very easy to pick out the LEADERS from these sectors and hold onto them.
The problem with choosing small sectors is that they may or may not happen but each of these except entertainment has the power to become 10% or more of our GDP so even if we go wrong on our estoimates the gains would be enough to hit a HOME RUN! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: reetesh
Date Posted: 23/Nov/2006 at 4:15pm
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In your last paragraph you mentioned about entertainment sector what do you mean by that, Radio and Multiplexes or with these 2 along with Electronic Media as well and which sector can grow perpetually if your answer is Finalcial Services then what % of GDP it can consitute over a period of time, I know these are all assumptions, but we can take clue from US and other emerging market..
One more point is why you always segregate between Banking Services( Banking operation, AMC, Brokerages) and pure Insurance? ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: BubbleVision
Date Posted: 23/Nov/2006 at 4:23pm
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BasantJi... can i assume that all the major players form the above sectors are already covered in http://theequitydesk.com/forum/forum_posts.asp?TID=429 - The Equity Desk-XI ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: basant
Date Posted: 23/Nov/2006 at 5:00pm
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Yes they are! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: basant
Date Posted: 23/Nov/2006 at 5:08pm
entertainment sector = Radio, Multiplex
Perpetual growth for 10 years could come from Retailing, Retail Banking, Insurance and ELectronic Media. We are yetb to see media convergence where your mobile phone would have a one minute news capsule on video costing Rs 1 etc etc.
Brokerages and AMC are dependent on the stock markets of we see a 40 PE on the index and then tank these sectors would slow down but not retail banking and insurance. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: reetesh
Date Posted: 23/Nov/2006 at 5:31pm
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right, okay now playing Insurance and Banking services? why there is no direct play on Insurance? when you say direct that means companies that are only into insurance, but you have ICICI bank, HDFC, or Kotak, ING. why they are not good enough a insurance play than a only Insurance companies? ------------- When going gets tough, that’s when tough (people) gets going. |
Posted By: basant
Date Posted: 14/Feb/2007 at 5:22pm
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That is because focused companies are always considered more valuable. Now sup[pose if Nuvo were to spin off its insurance business then it would have more buyers because investors who are uncomfortable with the telecom business would now be able to join in. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: tyler_durden
Date Posted: 23/Feb/2007 at 5:45pm
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While going through the forum's posts i came up across the following:
"what happened in usa or japan will happen in india" " which sectors would make it to sensex , can we predict this by lookin at nikkei or dow?" go here: http://en.wikipedia.org/wiki/Nikkei_225 http://en.wikipedia.org/wiki/Dow_Jones_Composite_Average lets look at sectors which will emerge and make it big... ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: tyler_durden
Date Posted: 23/Feb/2007 at 5:47pm
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what i noticed is:
food construction logistic and warehousing insurance ship building will make it big after retail n telecom ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: dilip
Date Posted: 09/Sep/2007 at 9:18pm
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India may run out of water by 2020: World Bank
any Interesting ideas here ?
plz throw light!! ------------- Dilip |
Posted By: kg
Date Posted: 09/Sep/2007 at 10:27pm
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which report of world bank.. can u pl give link ... ------------- Lets rock |
Posted By: italics
Date Posted: 19/Sep/2007 at 1:13pm
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Originally posted by basantji:
If I were to list them from current levels this is how I would go:
1) Electronic Media and Internet
2) Retailing
3) Insurance (nothing specific to play here)
4) Mobile Telephony (Growth should taper in 5 years)
5) Financial Services (Private Banking, Brokerages, Asset Management)
6) Entertainment - Radio and Multiplexes (growth shopuld taper off in 5 years here also)
Basantji just wondering if you would like to add, edit anything from this list with almost one year of hindsight.
Also these are my picks to play these sectors. Would like your opinion on them
1. Network 18, TV18 (are there any others here worth investing as of today?)
2. PRIL and Trent (would like your opinion on trent) and am adding Reliance (your opinion needed here too)
3. How would you play insurance as of today?
4. Bharati
5. Yes bank, Kotak (your opinion on the better of the two)
6. Adlabs, Inox, Enil (again your opinion on which is the best)
Look forward to your views. Thanks
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Posted By: basant
Date Posted: 19/Sep/2007 at 1:42pm
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No, that weightage preference remains the same on date. All stocks that you suggested look excellent. Yes is not an insurance play but an insurance distribution play. In the latter case the company saves on insurance writing and potential risks associated with that but loses out on the luxory of using the float - this is what made Berkshire Hathaway.
Have not come across the best insurance play here since there are no pure plays around.
Bharti does not have insurance it is in the promoter's back pocket.I like ENIL compared to trhe others.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: italics
Date Posted: 19/Sep/2007 at 3:08pm
Thanks basantji, good to see your conviction remains strong even in hindsight 
I had suggested Yes and Kotak as plays in the financial services sector.
About Bharati, it seems the promoters want to keep the real potential money spinners with them, at least for now! I guess that's how they got rich in the first place!
Are you still bearish on Trent? Is their lazy rich kid attitude still in place?
Any other sectors you are bullish on?
Utilities are a big play abroad (and a warren buffet favourite), but don't seem to have caught on here. Indraprastha Gas for ex. Any idea why these are lagging? Thanks.
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Posted By: basant
Date Posted: 19/Sep/2007 at 3:21pm
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Not bearish on Trent but I am bvearish on their entreprenurial zeal rather then their business model. Maybe someday they will wake up!
http://www.theequitydesk.com/forum/forum_posts.asp?TID=249 -
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Posted By: tejas
Date Posted: 19/Sep/2007 at 9:38am
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Trent me khate peete ghar ke log hai. ( More content, less motivation ) TED ke liye chahiye bhooke pyase ghar ke log. ( people will fire in belly ) Kuch kar ke dikhana hai. like Biyani,Raghav etc. Any bets on when Raghavs 18 ( thousand) BSE index figure will come ? ------------- Earnings, Earnings, Earnings. |
Posted By: basant
Date Posted: 19/Sep/2007 at 10:19am
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Should 18k matter? Finally this bull market will see a figure of between 35k-40k! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mohan
Date Posted: 20/Sep/2007 at 8:58am
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What kind of time frame are we talking here for the final target ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: Kalyan
Date Posted: 21/Sep/2007 at 3:55pm
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Expected within 2012 ------------- kalyan |
Posted By: kulman
Date Posted: 08/Dec/2007 at 11:16am
Excerpts from an http://economictimes.indiatimes.com/Promising_sectors_for_the_long_term/articleshow/2607887.cms - article in ET
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: vijayM
Date Posted: 27/Jan/2008 at 4:19pm
Dear Basantji,
your investment philosophy, TEDXI team and most of TED forum discussion focus on one theme : CONSUMER DEMAND & SERVICE.
The other theme of this bull market : INFRASTRUCTURE BUILDING OF THE NATION does not get any weightage.
1] Do you mean to say that CONSUMER DEMAND & SERVICE theme will outperform INFRASTRUCTURE theme?
2] If one wishes to include both the above themes in portfolio, what is your suggestion of weightages to each theme? Is it 50:50 or quite different?
I will be extremely happy if I get an elaborated answer from you Sir.
Thanks
Vijay.
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Posted By: basant
Date Posted: 27/Jan/2008 at 4:35pm
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I can fully understand your point. But I do not understand infrastructure companies as well as the consumer companies, also there is very little known about the gurus having made money in such companies plus to a very large extent I was unable to find global comparables in this. Hence the biasmess towards demographic plays. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: smartcat
Date Posted: 27/Jan/2008 at 5:17pm
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List of global infrastructure players from the http://money.cnn.com/magazines/fortune/global500/2007/industries/144/1.html - Fortune 500 list .
That's a pretty small list, but if you consider oil & gas allied services as an infrastructure play, then you have a large number of large companies like Halliburton, Schlumberger, Transocean etc . Indian comparables for oil & gas allied services are Punj Loyd, Shiv Vani and Aban Offshore respectively.
Though representation from USA is low, there are lots of Chinese & European infrastructure companies (power, engineering, roads, construction, railway etc) that make the list of Fortune 500.
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Posted By: deveshkayal
Date Posted: 27/Jan/2008 at 7:50pm
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Infrastructure will remain a hot theme for the next three years and its a good time to buy some stocks as every other Mutual Funds are coming out with an NFO on Infrastructure. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: vikram123_us200
Date Posted: 20/Feb/2008 at 2:28am
| can healthcare as a sector gain some momemtum in next 5-10 years?? i.e. hospitals because India still has a long way to go in healthcare or medical care |
Posted By: vijayM
Date Posted: 21/Feb/2008 at 4:37pm
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Basantji & TED friends,
Is there any mutual fund that has built the portfolio similar to TEDXI theme of multibagger stocks? I find most of them are overweight on infrastructure stocks.
vijay
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Posted By: investor
Date Posted: 21/Feb/2008 at 4:42pm
Basantji, please take note!  Coming Soon: THE TED FUND NFO !! Objective: To invest in 11 stocks only, no limitations on whether large, small or midcap segment, and no limitations on weightage either. Recomended for long term holding only! No exit and entry loads! No buying through agents or application forms, units can only be purchased online at theequitdesk.com!! Think about it Basantji  Im sure the NFO would get more subscription than even REL POWER!! 
------------- The market is a place where people with money meet people with experience. The people with experience get the money while people with money get experience! |
Posted By: omshivaya
Date Posted: 21/Feb/2008 at 5:59pm
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It is not time yet...long way ahead for that investor jee(even though I know you said all that in jest) ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: basant
Date Posted: 21/Apr/2011 at 11:27am
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: aniljain
Date Posted: 22/Apr/2011 at 1:22pm
 ------------- Investment is an art, not science |
Posted By: ambore
Date Posted: 23/Jul/2011 at 12:54pm
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Logistics sector, if the FDI is allowed and the retail sector becomes more
vibrant. I think walmart spends 3% of the retail price on supply chain
& logistics cost, where as I think in India it is upward of 25%. Need to identify good comapnies in this sector.
------------- Ramana Rao Ambore |